Although Bitcoin is a digital currency, consumers can buy It is possible to buy physical representations of the coins. / Rick Bowmer / File / Associated Press

Written by

Jamie McGee

The Tennessean

The digital currency Bitcoin is gaining steam in national and international markets, and several Nashville businesses are embracing the currency as a way to cut costs and be a part of a new wave of technology.

Nashville restaurant Flyte World Dining and Wine just stared accepting bitcoins this week, and has already processed a couple of transactions. Given the response on social media, Flyte co-owner Scott Sears expects to be able to report more transactions soon.

“We are just looking to use it to provide another payment option for our more progressive customers,” said Sears, who also works as vice president of client experience at email marketing company Emma. “For us, it’s all about being on the front edge of new technology and providing another way for customers in Nashville to be on the cutting edge of technology.”

Bitcoin, created in 2009, cuts the middlemen — credit card companies and banks — out of transactions and allows merchants to avoid the associated fees. Users buy and sell bitcoin on an exchange and store their currency in a digital wallet.

Bitcoin's value had been on a meteoric climb in recent months, topping $1,000 earlier this month, up from $13 in January.

However, prices fell sharply today after a Chinese bitcoin exchange, BTC China, announced it had stopped taking Chinese currency deposits. Beijing banned financial institutions from trading in bitcoin two weeks ago, according to Reuters.

On Wednesday, the price of a Bitcoin fell 18 percent to $558 and traded as low as $422.50 earlier in the day, according to an index run by CoinDesk, a website focused on digital currencies.

To use bitcoin as payment, Sears said, customers use their mobile device to transfer bitcoins from their wallet to Flyte’s through an app, and then processing company Coinbase converts the transaction from bitcoin to U.S. dollars. With Coinbase, Sears pays what amounts to 1 percent of the transaction, rather than the 2.75 percent fee that goes to a credit card company.

Sears was encouraged to try the new technology by Bill Butler, former CEO of Telalink Corp., one of Nashville’s first Internet companies, and who more recently created the advocacy site Music City Bitcoins to promote the use of the currency among Nashville businesses.

“The advent of Bitcoin is the first major change we’ve seen in payment processing really since credit cards came out,” said Butler, who has been reading about Bitcoin for the past two years. “In the last three or four months, I kind of had an ‘aha’ moment in the same way I did when I saw the first Web browser back in ’93. Something clicked that said this is going to be permanent and long term. … Once people fully understand the full feature set, you are going to see entire industries change and adapt.”

A 'disruptive' force

Bitcoin has been accepted by a growing number of corporations including OkCupid, Reddit and CheapAir.com, and interest has caught on among Nashville merchants and consumers.

Luke Stokes, who runs e-commerce company FoxyCart, began blogging about Bitcoin this year, fascinated by the technology and its possibilities. He began buying the currency in February when it was going for $20 a bitcoin and began accepting bitcoin as payment for FoxyCart in April, as well as allowing its more than 2,000 store clients to offer it as a payment method.

After presenting on “Why Bitcoin May Be More Disruptive Than the Internet” at Nashville BarCamp in November, Stokes created a Nashville Bitcoin Meetup group with John Meese, and 31 people showed up at their first meeting last week.

“It’s one of those things I think is revolutionary,” Stokes said.

Aaron Vaughn, a Nashville custom homebuilder, began accepting bitcoin for handyman jobs about eight months ago. In addition to avoiding 3 to 5 percent credit card fees, he feels more secure using the digital currency because he can immediately verify that the transaction went through, rather than having to wait for a check to go through.

Franklin photographer Sean McLellan, of McLellan Style, said he has used bitcoin to buy biodiesel, books and car repairs and will begin to accept bitcoin for payment for his photography. He has also set up bitcoin for his grandparents’ McLellan School of Golf in Franklin.

“I don’t see how it’s stoppable long-term because all of the technological capabilities of the protocol itself,” McLellan said. “I think it’s going to be equally, if not more revolutionary, than the Internet itself was.”